Core Lithium share price charges 6% higher on solid quarterly update

Investors appear impressed with Core Lithium's performance in the first quarter.

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The Core Lithium Ltd (ASX: CXO) share price is on the move on Friday morning.

At the time of writing, the lithium miner's shares are up 6% to 37 cents.

Why is the Core Lithium share price rising?

Investors have been bidding the Core Lithium share price higher today following the release of the company's quarterly update.

For the three months ended 30 September, Core Lithium reported a 41% quarter on quarter (QoQ) increase in spodumene concentrate production to 20,692 tonnes with 50% recoveries.

This was underpinned by an improved performance from the Grants mine, which was driven by a series of performance improvement initiatives that were adopted by the mining team.

However, this was achieved with a cash operating unit cost of A$1,889 per tonne, which was up 11.7% quarter on quarter. This was due to a lower strip ratio, resulting in a higher proportion of the mining costs being expensed rather than capitalised. Positively, its C1 cost was relatively flat at A$904 per tonne.

The company revealed that it commanded an average realised price of US$2,560 per tonne for its spodumene during the period. So, it is still enjoying a decent cash margin despite falling lithium prices.

Limited financial data was provided by the company. But what we do know is that it recorded a cash outflow of $25.97 million for the three months due to the timing of shipments and a repayment to Yahua for a QP adjustment.

This meant that Core Lithium ended the period with $202.1 million of cash and no debt. This cash balance includes the $107.9 million proceeds from its recent capital raising.

'Good progress'

Commenting on the quarter, Core Lithium's CEO, Gareth Manderson, said:

This was a quarter of good progress in our three areas of focus; safely ramping up and optimising our concentrate production operations at Grants, progressing the BP33 Project and delivering our exploration plan. Mining and processing performance improvement is tangible and I am very proud of the way the team are working thoroughly and at pace to achieve our improvement objectives.

Increasing recoveries is one of the greatest levers we have to add value to our business. Recovery has increased to an average 50% for the quarter. There has been a steady improvement over time and in October to date, we have seen average recoveries of around 55%. Recovery improvement trials are continuing to work to lock in and improve upon these results and ensure we continue to meet our customers' specifications.

Manderson also provided a brief update on the BP33 development. He said:

It is a hive of activity at BP33 where the team is working to achieve as much as they can in the dry season. The 288m long and 40m deep box cut excavation has progressed well and deliveries of the steelwork for the tunnel which covers the box-cut to manage water ingress, were completed in October.

The results of the BP33 drilling program, announced in October, have led to 89% of the 10.5Mt resource now classified as Measured and Indicated. This is a very positive step towards the development of the BP33 mine plan and is being incorporated into the updated feasibility study, on track to be delivered in Q1 CY24. The underground mining method has been selected and it has been encouraging to see strong interest from a number of specialist underground mining contractors.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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